Plane Designer Mulls Partnerships to End Delays: Corporate India

The Saras aircraft takes off from the Hindustan Aeronautics Ltd. (HAL) airport in Bangalore on June 7, 2004. National Aerospace Laboratories spent 23 years on the Saras project and has yet to win local certification for the plane, one of which crashed during a test flight in 2009. Photographer: Indranil Mukherjee/AFP/Getty Images

Aug 27 (Bloomberg) -- India, seeking to build its first
regional aircraft, is considering roping in local and foreign
partners for the project, after spending more than two decades
to build a smaller plane.

A study under review by a government panel favors tie-ups
with equipment makers rather than purchasing engines and parts
from them, Satish Chandra, head of aircraft program at National
Aerospace Laboratories, a state-owned plane designer involved in
the development, said in a telephone interview from Bangalore.
He didn’t give a timeframe for the project.

Prime Minister Manmohan Singh last month approved the plan
for a 70- to 100-seat aircraft as economic growth and rising
disposable incomes spur air travel demand. Boeing Co. expects
India will require 1,450 planes in 20 years. The project will
also help the nation catch up with China, Japan and Russia in
building a regional aircraft and reduce dependence on Bombardier
Inc. and Embraer SA, the two companies that dominate the market
for such planes.

“You need to start somewhere and you need to build the
expertise so that it has spinoffs to other sectors,” Chandra
said. “Projects like these may actually be the kickstart for
you to integrate into the global economy.”

India’s plan to build the regional aircraft comes after
little success with an earlier attempt to build an indigenous
14-seat plane called Saras. NAL spent 23 years on the project
and has yet to win local certification for the plane, one of
which crashed during a test flight in 2009.

Plane Crash

The plane crashed because of reasons including NAL’s
failure to consult the aircraft’s propeller maker during tests,
according to the Directorate General of Civil Aviation, the
nation’s civilian aviation regulator that probed the accident.

Saras’s certification by the Center for Military
Airworthiness & Certification under India’s defense ministry is
expected this year, according to NAL website. Chandra declined
to comment on the current status of Saras, which means crane in
Sanskrit.

The nation’s bid to build a fighter jet has also suffered
setbacks. State-run Hindustan Aeronautics Ltd. is yet to start
deliveries of the Light Combat Aircraft, which uses a General
Electric Co. engine. The program was approved in 1983.

“The complexity of commercial aircraft development is well
beyond the capabilities of NAL and HAL,” said Ernie Arvai,
chief executive officer of the Arvai Group, a Windham, New
Hampshire-based aviation consultancy. “The Saras project was a
disaster. The failure of the Light Combat Aircraft program and
others clearly indicate a lack of capability in integrating the
various element of aircraft design into feasible and safe
designs.”

787, A380

Delays for new aircraft are common in the industry. Boeing
Co. and Airbus SAS, both with years of experience building
large, complicated jets, have had to push back introductions.

The 787 Dreamliner, Boeing’s most advanced jet, entered
commercial service at the end of 2011 after more than three
years of delays. Airbus A380 superjumbo began commercial flights
in 2007 after more than two years of delays and cost overruns.

Mitsubishi Heavy Industries Ltd.’s aircraft unit, which is
making Japan’s first regional passenger jet, last week pushed
back the delivery of its first plane by more than a year.
Commercial Aircraft Corp. of China is said to delay the maiden
test flight of the country’s first large passenger plane to 2015
from an earlier plan for next year.

Chandra said the National Manufacturing Competitiveness
Council will study the regional aircraft plan and a decision on
number of its seats and the type of engine will be decided
later. NMCC Chairman V. Krishnamurthy didn’t respond to calls to
his work phone and e-mailed questions.

Mahindra, Taneja

The government is considering to set up a special purpose
vehicle to steer the development and production of the plane,
according to a July 9 statement from the Prime Minister’s
Office. The capabilities of NAL and HAL and other institutions
in the country will be utilized, according to the statement.

Carriers in India will need 1,450 new planes worth $175
billion over the next 20 years, Boeing forecast in February. The
International Air Transport Association has said India may be
the world’s fastest-growing aviation market after Kazakhstan by
2016.

“There’s no point reinventing the wheel on technologies
that may have already been developed elsewhere at a fraction of
the cost,” said Amber Dubey, a Gurgaon, India-based partner at
consultancy KPMG. “The critical requirement would be to provide
adequate funding support, fix clear accountability and specific
time, cost and quality targets.”

Private Partners

NAL last year held talks with a unit of Mahindra & Mahindra
Ltd. and Taneja Aerospace & Aviation Ltd. on partnering for the
regional aircraft. Mumbai-based Mahindra, India’s biggest maker
of sport-utility vehicles, bought two Australian aerospace
companies in 2009.

Taneja, based in Tamil Nadu, southern India, makes light
planes. It is India’s only private company to have locally
developed a certified aircraft, according to its website.

Saab AB last year said it’ll pursue a risk-sharing
partnership with a yet-to-be-selected company from India, as it
considered a return to the regional-plane market. NAL’s Chandra
said companies and countries have shown interest in the regional
aircraft project without naming anyone.

“From the beginning, they will need private industry
partners,” said Dhiraj Mathur, an executive director at
PricewaterhouseCoopers LLP’s India unit. “The aerospace
industry is not an easy industry.”